SANTA MONICA, Oct 9
(Reuters) - Water development company Cadiz Inc. said late Tuesday a southern California
water district has rejected by a close vote the firm's proposed water storage project. The project, which was expected to be a
partnership between Santa Monica, Calif-based Cadiz and the Metropolitan Water District of
Southern California, was to generate an estimated $500 million to $1 billion in revenue
for the company over the next 50 years, The Los Angeles Times reported Wednesday.

Cadiz described the project as the only
California-based storage and supply project along the Colorado River Aqueduct to receive
all of its federal environmental approvals. The Los Angeles Times reported that the
cancellation of the project comes as the company has an interest payment of $7 million due
to bondholders within a week. A bank loan of about $35 million is due at the end of
January, according to The Times.

While the Metropolitan staff recommended to
approve the project, the District's board elected not to proceed with it. Cadiz said it
was evaluating its options following the water district's decision, and said it believed
the program was viable and would continue to pursue it.

Cadiz said the district board's rejection is
contrary to the opinion of the Department of the Interior, Bureau of Land Management,
County of San Bernardino and other governmental agencies, all of which have favored the
project and granted all approvals and permits. The company called the vote
"astonishing since it was without the benefit of any hearings or briefings on the
current environmental safeguards approved by the Department of the Interior or status of
the contractual negotiation process." "We firmly disagree with Metropolitan in
that we believe the decision ignores both the letter and spirit of Metropolitan's
contracts with Cadiz, which collectively obligate Metropolitan to complete the
environmental review process and turn the entitlements over to its venture partner
Cadiz," Keith Brackpool, Cadiz Chairman and Chief Executive Officer, said in a
prepared statement.